China has become the leader in wind energy capacity, seizing the lead from the US, where last year installations dropped to half of what they were in 2009.

US installations totalled 5,115 megawatts of wind power in 2010, barely half of 2009’s record pace because of what the industry sees as the lack of predictable long-term federal policies on renewable energy grants.

US wind capacity now stands at 40,180 megawatts, an increase in capacity of 15 per cent over the start of 2010, the American Wind Energy Association said on Monday. It said China now has 41,800 megawatts in operation, an increase of 62 per cent in capacity over a year ago.

Towards the end of last year, wind installations came to a standstill as the industry waited for Congress to renew a provision enabling the industry to obtain a cash grant in lieu of an investment tax credit, which had been a key factor behind growth. The provision eventually passed in late December but only for one year, resulting in long-term uncertainty.

“Our industry continues to ensure a boom-bust cycle because of the lack of long-term predictable federal policies,” said Denise Bode, chief executive of the American Wind Energy Association, the national trade association.

Research by General Electric has shown that investments in the wind industry have risen and fallen along with the renewal and expiration of renewable energy incentives. The expiration of incentives in 2000, 2002 and 2004, for example, caused a 76-90 per cent drop in installed capacity in the US from the previous year.

Complicating the efforts to maintain US growth in wind generation are low natural gas prices, which are leading power producers to favour that fossil fuel.

”Now that we’re competing with natural gas on cost, we need consistent federal policies to ensure we have a diverse portfolio of energy sources in this country, and don’t become over-reliant on one source or another,” Ms Bode said.

The renewal of the tax credit at the end of last year means the industry entered 2011 with more than 5,600 megawatts of electric power under construction, encouraging a more robust growth rate for this year.